Sprinkle 1/4 teaspoon salt and 1/4 teaspoon black pepper evenly over steaks. Combine cracker crumbs, 1 cup flour, 1 teaspoon salt, 1/2 teaspoon black pepper, red pepper, and baking powder. Whisk together 3/4 cup milk and eggs. Dredge steaks in cracker mixture; dip in milk mixture, and dredge again in cracker mixture.
Pour oil into a 12-inch skillet; heat to 360°. (Do not use a nonstick skillet.) Fry steaks 3 to 4 minutes. Turn and fry 2 to 3 minutes or until golden brown. Remove steaks to a wire rack in a jelly-roll pan. Keep steaks warm in a 225° oven. Carefully drain hot oil, reserving cooked bits and 1 tablespoon drippings in skillet.
Whisk together remaining 4 cups milk, 1/4 cup flour, remaining 1 teaspoon salt, and remaining 1 teaspoon black pepper. Add milk mixture to reserved drippings in skillet; cook, whisking constantly, over medium-high heat 10 to 12 minutes or until thickened. Serve gravy with steaks. Garnish, if desired.